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Month's Feature Articles: Need to Amend Tax-Qualified Retirement Plans by End of 2001 Plan Year We are writing this letter concerning the tax-qualified retirement plan that you have implemented for your company. Over the last several years, there have been a number of changes to the tax laws governing tax-qualified retirement plans. As you may recall, as each of these changes have become effective, we have apprised you of the need to change the way in which you have operated your plan to reflect each change in the law as it has become effective. As long as your retirement plan has been operating in compliance with these changes as they have become effective, the IRS has delayed the deadline by which you need to make a written amendment to the plan document to formally reflect these changes. Although the IRS has extended the time in which you must formally amend the plan, this extension only lasts until the end of 2001. Since your plan needs to be amended by the end of the year, we think this would be a good time to meet with your plan administrator to discuss the required amendments. This would also be a good opportunity to review how you feel the plan is working and review any other changes that you may want to make in the terms of the plan that you could include in this amendment. Although it is not an absolute requirement of the law, when a plan amendment is made, the IRS has a program in place to review the amendment and to give the IRS seal of approval that the plan amendment meets all of the IRS's requirements (called a "determination letter"). Although it is not an absolute requirement, we believe that it is highly advisable to go through this process, and the vast majority of taxpayers do apply for a letter. Once the latest version of the plan has received an IRS determination letter, if the company is audited, the ability to produce a recent IRS determination letter usually means that the company audit will not result in an in-depth audit of the retirement plan. Needless to say, having this determination letter can save time and money for your business. Once you have amended the plan, the deadline for making an application with the IRS for a determination letter does not fall until the due date of your business's tax return for the 2001 tax year, including extensions. Adding your own modifications to the amendment and completing a determination letter application will require us to obtain considerable information from you. You should begin the process of preparing the required amendment and the application for a determination letter from the IRS with respect to the plan amendment as soon as possible. Please call us if you would like to discuss this further.
Veres
& Company
Freedom Square Office Park |
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